For over 70 years, professional investors have relied on an investment strategy known as Modern Portfolio Theory (MPT). Developed in the 1950s by Nobel Prize-winning economists Harry Markowitz and Bill Sharpe, MPT popularized the classic 60/40 portfolio—roughly 60 percent stocks and 40 percent bonds—as a way to diversify risk and maximize returns. But Larry Fink, CEO of BlackRock, the world’s largest asset manager, is now questioning that long-standing principle.
As the global financial system evolves, Fink argues, a better formula to allocate assets should be something like a 50/30/20 portfolio: 50 percent stocks, 30 percent bonds and 20 percent private assets, such as infrastructure, real estate and equity in privately owned companies.
Fink proposed this idea in his annual letter to investors published this week, dedicating a substantial section to private markets and calling for broader access to private assets for retail investors.
Private assets encompass infrastructure projects like ports, bridges, and power grids, as well as companies that aren’t publicly traded. Historically, these investments have been the domain of governments, bank loans, and wealthy individuals who have to meet strict income or capital thresholds. While they carry higher risks, these investments also tend to offer greater returns. As more companies (especially rapidly-growing ones in Silicon Valley) stay private for longer and the demand for infrastructure surges, governments and banks are struggling to keep up.
“Assets that will define the future…aren’t available to most investors,” Fink wrote. “As we enter our century’s second quarter, there’s a growing mismatch between the demand for investment and the capital available from traditional sources.”
To help close this funding gap, BlackRock is channeling its clients into private market opportunities through a series of strategic acquisitions. BlackRock’s clients include institutional investors—like pension funds, university endowments and insurance companies—as well as retail investors who can own a piece of BlackRock’s portfolio through its mutual funds and iShare ETFs.
In October 2024, BlackRock acquired Global Infrastructure Partners (GIP), a firm owning and operating assets in energy, transportation, water and waste management, and digital infrastructure sectors. BlackRock is also in the process of acquiring Preqin, a leading data provider specializing in private markets, and HPS Investment Partners, an asset manager of private credit.
Making private markets more transparent
Beyond access, another obstacle that discourages investors from entering private markets is a lack of transparency. “Investing in private markets feels a bit like buying a house in an unfamiliar neighborhood before Zillow existed, where finding accurate prices was difficult or impossible,” Fink wrote.
“For decades, private markets have been among the most opaque corners of finance. Investors know these assets hold long-term value—but exactly how much value? That’s not always easy to determine,” he added.
The answer to that questions lies in data—think how Zillow brings clarity on real estate and what Bloomberg terminals do for stocks and bonds. BlackRock aims to provide the same level of transparency to private markets through data providers like Preqin, which tracks 190,000 funds and 60,000 private asset managers globally. “Preqin effectively does for private markets what Zillow did for housing,” Fink wrote.
“With clearer, more timely data, it becomes possible to index private markets just like we do now with the S&P 500,” the CEO added. “Once that happens, private markets will be accessible, simple markets. Easy to buy. Easy to track. And that means capital will flow more freely throughout the economy.”
